In a world that increasingly prioritizes decarbonization and sustainability,
you would think it would be tough times for a mining company. But,
noting “strong coal prices” combined with “solid strategy” revealed
in a virtual investor day, BMO Capital Markets has upgraded Teck Resources Ltd. (TECK:TSX; TECK:NYSE) to Outperform and raised their one-year target to CA$44.00/share (from CA$40.00/share).
In other words, by meeting the world’s conflicting needs for both steel and sustainability, Teck Resources is poised for success.
Teck’s investments in technology and use of cost-effective, low-carbon blast furnace and BOF steelmaking are showing significant benefits.
According to a BMO report, “Yesterday's virtual investor day update provided helpful color company's operations, its corporate strategy, and sustainability initiatives. The important QB2 project is progressing on schedule, investments in technology are showing significant benefits, and cash flows are strong (especially in the case of sustained spot copper and coal commodity prices).”
After a year of COVID-19-related drops in demand, steel supply has become more limited than need. China, which accounts for more than half of the global steel output, has cut production an effort to reduce carbon emissions. However, Teck’s investments in technology and use of cost-effective, low-carbon blast furnace and BOF steelmaking are showing significant benefits. Despite the world’s increasing focus on decarbonization and sustainability,
Teck expects that blast furnace-based processes will still be important steelmaking processes in the foreseeable future.
As factors contributing to the decision to upgrade Teck to Outperform, BMO cited strong cash flows as prices remain elevated in Teck’s key commodities and a clear and well-articulated strategy for integrating sustainability into production to meet global demand.
Disclosures:
1) Wendy Hubbert compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee. He/she or members of his/her household own securities of the following companies mentioned in the article: None. He/she or members of his/her household are paid by the following companies mentioned in this article: None. His/her company has a financial relationship with the following companies referred to in this article: None.
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4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Teck Resources Ltd., a company mentioned in this article.
Disclosures from BMO Capital Markets, Teck Resources, Sept. 21, 2021
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